The budget news coming out of the Department of Defense poses significant challenges for the military as well as its industrial base. Touted programs, once thought immune, are being cut, acquisition timelines are sliding to the right, and troop levels are declining. The military worries about its readiness. A new normal is settling over the Pentagon and those who support it.

These changes will require more from industry in terms of research and development. In August, Frank Kendall, the undersecretary of defense for acquisition, technology and logistics, speculated that sequestration would likely fall onto investment accounts, research and development, and production. “I don’t see any way around that,” said Kendall.

This new way of thinking — minimizing research and development costs while maximizing efficiency and capability — means a new way of doing business for traditional defense contractors as well. Defense contractors will see fewer traditional programs of record and a greater emphasis on a competitive acquisition model that favors non-developmental items, or NDI. This new, highly competitive environment will benefit the warfighter and the taxpayer alike by providing the newest capabilities, more often, at a more affordable price.

The Army and its approach to network modernization provide an excellent example of this new way of operating. Facing budgetary constraints even before sequestration, the Army has implemented and embraces the Agile Acquisition process to optimize its programs. With the visionary advocacy of Undersecretary Kendall, similar strategies are being implemented across the DoD. While big programs, such as armored vehicles, aircraft, tanks and ships, are not going to fit nicely into this construct, information technology products such as radios are perfect. As we know from the commercial markets, IT lifecycles are very short and require a process for rapid upgrades.

A non-developmental item involves the use of commercially developed technology aligned with military requirements. As I’ve written in the past, the basic benefit of the NDI lifecycle begins with the expectation that an NDI product should not be built for a single program, but rather for broad customer acceptance over multiple programs. In an NDI program, a company should factor in product growth, enhancement and sustainment as a critical step in the planning process — which ensures that a vendor can recoup R&D spending over time and over a larger customer base, and that an optimal product is produced.

The benefit of this type of acquisition for the military is faster development and more competitive bids on contracts. Take the Army’s Mid-tier Networking Vehicular Radio competition, recently awarded to Harris Corp. The product that Harris offered was based on the technology we had already developed commercially, but modified to fit the Army’s specific requirements. Our proposed solution was seen as mature, reliable and affordable, and it required no taxpayer dollars for development. This NDI procurement has enabled the Army to field the most capable radio available at a cost-competitive price.

The budget constraints the military faces are a challenge that will require the military to truly reform its acquisition system while the defense industry will learn to absorb costs that have usually fallen on the DoD. There will be some growing pains, but this the reality in which we all must face. Industry would do well to embrace it.